The theme of my book, The Left, the Right, and the State, is that both sides of the political aisle represent a grave threat to liberty — though each of a different sort.  It is like two people tugging at a turkey’s wishbone: the turkey is liberty, and you are the bone.

We’ve lived through eight years of the threat from the Right. It was all about nationalism, militarism, war, torture, state secrets, attacks on privacy, the use of tax funds to subsidize “conservative values,” the outsourcing of government in a fascistic business-government partnership, the banning of products and services that government doesn’t like, the regimentation of educational life, government impositions in the name of security, and so on.

With the end of the Bush years, many of these threats have receded, if only slightly. Consider the problem of nationalism, for example. The neoconservatives who ran the country during the last two Bush terms exploited this dangerous impulse for all it was worth.

If you were not for their wars, you were against America, and hence deserving of jail without trial. The whole ideological apparatus of the Bush years was profoundly anti-intellectual, and while the neocons shouted down anyone who compared their administration to the Third Reich or Mussolini, the ideological comparison was actually quite apt: right-wing government control stems from the same motives of exalting security, discipline, and chauvinism above liberty.

In two short months, however, that ethos has subsided, and it has been replaced by a threat from the Left. It is tragic that Obama should be president at all. If we had a position called “national well-wisher,” “national greeter,” or “national symbol of accomplishment,” he would be perfect for the job. He is elegant, graceful, and articulate, and he inspires people in an unusual way. As chief policymaker, however, he has revealed himself as nothing more than a two-bit socialist.

After all the ghastly statism of the Bush years, you might think that the Left would back off from using power to achieve its aims. Instead, they have learned nothing. The Left has been lying in wait for its chance. As the Obama people entered the White House, it was as if they found a closet labeled “failed ideas of the past.” They opened it and the contents spilled everywhere. They started grabbing things and putting them in the regulatory books and in legislation.

What an amazing pile of junky, worn-out, bogus policy ideas! Equal pay for equal work. Infrastructure spending. More money to the public schools. Socialized medicine. Rock-bottom interest rates. Welfare! Every wish granted by government. Down with business. Down with business failures. Curbs on fat-cat pay. Down with Wall Street. Turn on the money spigots. Expropriate the expropriators. Subsidies for every lifestyle that flies in the face of bourgeois prejudice.

Thus are we again reminded of what a profound threat the Left represents to liberty. It’s been more than a decade now since we’ve seen this at work, and probably longer really. Clinton was a pain, but he was smart enough not to take his reigning ideological framework too seriously. He actually showed some deference to reality from time to time.

The Obamaites are different. They are woefully ignorant of economics. They seem to actually believe all that socialist claptrap that has provided an excuse for innumerable foreign dictators: the idea that government is the source of wealth and can make anything happen with the push of a button.

They see no limits to the possibility that government can make society perfect, righting every perceived social injustice, and bringing prosperity to all via stealing from the haves and giving it to the have-nots. Is there inequality? Mandate equality. Is there deprivation? Provide! Recession? Spend hundreds of billions!

What we have here is not just a profound love of the state; it is a profound confidence in the capacity of the unlimited state to create heaven on earth. How does this square with the idea of human liberty, of social cooperation, and of the rights of all? Herein lies the great mystery of leftism. The Left seems oblivious to the relationship between their chosen means and their ends. It’s not that they hate liberty as such; it is that they believe that it must always take a backseat to other social priorities, like equality. In the end, they have a tendency to build the total state and find themselves taken aback when the whole of society ends up in a cage.

Those Obamaites! So compassionate, loving, universally minded, progressive — except that their ideological cousins managed to starve and destroy whole civilizations. Loyalty to their creed means death, because their ideology is the pathway to the gulag — and for one simple reason: their preferred means of social change is the state. The state is always and everywhere a threat to liberty, and liberty is the basic building block of prosperity and civilization.

Despite the slogans about progress, the upshot of the Obama administration is as deeply reactionary as anything that Bush conjured up. Despite all the hype and hope, what Obama offers is nothing new. It amounts to the robber state and the regimentation of society, a plan that will kill off prosperity and the conditions that allow for it.

The Republicans are right to fight this tendency at every turn, for it represents a radical attack on all things truly American. Worse still, by playing with the printing presses, the policy tendency here is also deeply dangerous. It could destroy the dollar internationally and domestically, igniting a hyperinflation that no one will be able to control once it gets going. One only wishes that the Republicans had been so principled when their president was in charge!

The Obama administration says that we have to give the stimulus time to work. No need. The stimulus will not work. If we manage to pull ourselves out of this slump, it will be despite and not because of this stimulus package.

When putting together my book, I wondered which threat was actually more dangerous for us, the Right or the Left. I’m still not sure, for national socialism and international socialism are in close competition.  I ended up focusing on both.

Source: The Left in Power

Grand Theft Society

Llewellyn H. Rockwell

A core problem with government is that its managers believe that all reality will conform to their wishes if they issue the right orders, pass the right laws, and put the right people in charge. Reality resists this simple-minded approach; witness the debacle of the war on terror. Sadly, the same group that has managed that war is now managing another one: the war on recession.

The tendency of these managers is to fabricate a view of cause and effect that conforms to what they would like to do. In the war on terror, we were told that the 9-11 attacks came about because shadowy bad guys from afar resent our freedom. If you believe that, the answer is more militarism and killing as a preventative measure. If, however, you realize that these attacks grew out of a desire for vengeance against American military policies, the implied policy solution looks radically different.

So it is with the economy and the proper policy response to recession. If you believe that there is no good reason for an economic downturn other than a wave of animal spirits and flagging public confidence, your response is to inject optimism via the printing press. Surely, nothing makes folks happier – temporarily – than for them to find themselves awash in newly printed bills. This will lead to internal joy, consumer spending, and thus recovery.

So believes the silly political class.

Consider a different view of cause and effect. If the recession is a correction to an overly pumped economic boom, matters change. The recession, then, is not an aberration crying out for correction; it is itself the correction for the unsustainable economic bubble that preceded it. It should be welcomed in the same way we welcome a sober day after a drunken evening, or the detoxification of an addict after a period of addiction.

But here again, government begins with a view of cause and effect that conforms to its institutional wishes. The recession is the problem, and the only problem, and it can be corrected through the usual means: issuing orders, passing laws, and giving more power to the right people.

It gets worse. A recession contains at least one feature that turns out to be a saving grace for consumers who are hit with economic instability. In the midst of layoffs, tighter lending standards, and a riskier entrepreneurial environment, at least there are some sectors that have declining prices. At least in some areas, the purchasing power of money is rising. This makes life a bit easier. In times when there is very little good news, this is something to hang on to.

But instead of seeing falling prices as the silver lining in the recessionary cloud, government (and the media as an echo) sees them as the cause of all other problems. So, wouldn’t you know, government sets out to stamp out falling prices on the theory that if this succeeds, the entire economy will rise like a phoenix from the ashes.

This was the view during the Great Depression. Herbert Hoover’s and then FDR’s economic team was convinced that falling prices represented not a saving grace but a mortal economic sin. They spent more than ten years trying to make all prices rise. This, they believed, would cause recovery. They tried inflating the money supply. They tried wage and price floors, with vigilante enforcement, and even all-around industrial price planning. Finally, FDR tried the ultimate sand-in-your-face tactic: he went to war, and sent all those unemployed folks to foreign lands to kill and be killed, or to make-work jobs in the military-industrial complex, the CCC on steroids.

What did we learn from that debacle? Let’s make it official: we have learned nothing from our experience during the Great Depression. Even now, people are under the impression that falling prices cause recessions. Here is proof from the lead to this New York Times story: “With sinking home values continuing to drag down the economy…”

Sorry, but it just isn’t true. Falling house prices are not good news for homeowners who believed that they had purchased an asset that would forever go up in price. But they are wonderful news for people who are shopping for homes. They can buy more for less, and avoid frightening levels of mortgage debt in the process. In macroeconomic terms, the housing bust is also a welcome event since it was precisely this sector that was wildly ballooned during the boom. Unsound investments (or consumption goods masquerading as investments) must be leveled out before economic recovery can begin.

But it is really true that an economy can survive and thrive with falling prices. Falling computer prices didn’t drag down the economy in the ’90s. Nor did falling clothing prices. And consider the Gilded Era, the most prosperous until that point in all of human history. The consumer price index fell from 47 in 1864 to 25 in 1900 – nearly by half. That’s another way of saying that money became twice as valuable. And where was the calamity? Savings and pay packets zoomed in value. This period is called the Second Industrial Revolution because of the astounding increases in productivity, population, and technology. Falling prices and sustainable economic expansion are positively related in all of economic history.

If government and the Fed succeed in propping up home prices or preventing them from falling as much as they might otherwise, what will be the result? Homes will continue to be overexpensive and, on the margin, unwarranted purchases. This will not bring about economic recovery. This will force American consumers to spend more at precisely the time when they should be saving and getting out of debt.

There are lessons here. One is never to permit the government to discern the relationship between cause and effect. Government invariably rules out the possibility that the structure of the public sector itself is to blame for the problem, whether that problem is terrorism or recession.

Another lesson is that we need to shut down the machinery that allows government to enact its plans. If there continues to be a slice of the population that gets its kicks from issuing orders and trying to make the world conform to them, these people ought to be given a video-game console to play with. The game can be called Grand Theft Society. The stakes are too high to permit them to play their games using real wealth and real lives.

Regards,

Lew Rockwell
for The Daily Reckoning

Source: Grand Theft Society

Llewellyn H. Rockwell, Jr. president of the Ludwig von Mises Institute, writes, “All this nonsense about digging ourselves out of recession through government intervention began with the New Deal”, when FDR “used the economic downturn as the great excuse to make himself the economic führer of America.”

But this, thankfully, is not about history or about how I did not do last night’s homework, but that Mr. Rockwell noted that “here is the amazing fact: not once has this strategy worked. Not in the New Deal. Not in the 1970s. Not in the 1980s. Not in the 1990s. Not once has government done anything to restore prosperity during a slump. What happens again and again is that government spends, the Fed inflates, the regulators punish, there is wailing and gnashing of teeth, and then, at some point, we hit bottom, and normalcy begins to return again. The most government can do is prolong the period at the bottom. Otherwise, it is just wasting resources.”

Like what? Well, when the Fed cut interest rates from 3% to 2.25%, it not only hacked the hell out of interest rates by a whopping quarter in a huge “25% off sale!” on money, but in the process took the Fed Funds rate to a real (inflation-adjusted) rate of less than zero, even if one takes the “official” rate of inflation of 4%! Negative real interest rates!

But, hell; the 2-year bond is yielding a nominal 1.3% a year (a loss of 2.7% in buying power), the 10-note year is yielding 3.3% (a loss of 0.7%), and some “investor” morons are buying 30-year bonds at prices so high that they are yielding barely 4%! All of this at the same time as the money supply is growing at 17% a year! Yow! Un-freaking-believable!

So if you want to know why we are in such big trouble and why people who try and save a little money have to be crushed, why your grandparents and your parents are going to be calling you up wanting to borrow some money, and why my new Mogambo Instructional Booklet (MIB) “50 ways to say ‘No! And never call me again’” will be such a smash hit, it is because we are obviously idiots, thanks to a ruinously incompetent education system, for which Ben Bernanke (erstwhile head of Princeton University’s economics department) is living proof.

I mean, 3-month T-bills are now yielding 0.5%, which is one-half of one percent, which is also the lowest level in 50 years! This low rate may be expected in such short-term paper when the Fed is pounding more and more money into the economy, but it takes a real idiot to see that, and yet turn right around to buy a 10-year government bond to yield, for every day of the coming 10-years, 3.33%! On which tax is due! Hahaha!

This brings up Tim McTague saying, in his “D.C. Current” column in Barron’s, that Bill Dunkelberg, of Liberty Bell Bank, “opposes recent rate cuts, which he says are punishing smaller financial institutions like his and legions of elderly people who depend on savings for income.”

Mr. McTague notes that the rate for a 5-year certificate of deposit is now paying a piddly 3.37% interest, while “The headline rate of inflation which includes food and fuel, exceeds 4%. In essence, savers are losing money to prop up the big Wall Street brokerage houses” and other financial institutions.

Mr. Dunkelberg is more direct, and says that people who depend on their little bits of interest that they make on their saved money (like the elderly) “are being screwed by the Fed”, which has a little more of that raw disdain and contempt that the Fed so clearly deserves.

And where is the Congress in all of this? Helping! Like the old joke goes, “We’re from the government, and we’re here to help you”, which explicitly means that you will soon suffer, as we learn from Bloomberg.com; “The U.S. may pay a steep price to free itself of its economic and financial travails: bigger government, faster inflation and a poorer country.” Gaahhhh!

To relieve the tension, I made up a new joke. A guy walks into a bar and the place is full of beautiful young ladies. They say, “Mogambo! We love you and you make us so hot! Let’s celebrate with some of your hot monkey love!” And the guy says to the bartender, “I have some good news and some bad news! The U.S. may pay a steep price to free itself of its economic and financial travails: bigger government, faster inflation and a poorer country.”

The bartender says, “My God! That’s the price? What’s the good news?”, and the stranger says, “That IS the good news!” Hahahahaha!

I hope this little humor comforts you as you suffer a falling standard of living for the rest of your life! Too bad it’s not funny.